Semi-Fi: G8: Business And Equity Valuation

Question 1

Also known as a company valuation, it is the process of determining the economic value of a business. During the valuation process, all areas of a business are analyze to determine its worth and the worth of its departments or units.

Answer 1

Business Valuation

Question 2

The simplest method of business valuation. It is calculated by multiplying the companies share price by its total number of shares outstanding.

Answer 2

Market capitalization

Question 3

A stream of revenue is generated over a certain period of time is applied to a multiplier which depends on the industry and economic environment

Answer 3

Times revenue method

Question 4

Instead of the times revenue method, this method may be used to get a more accurate picture of the real value of a company, since a companies, profits are a more reliable indicator of its financial success than sales revenue is.

Answer 4

Earnings multiplier

Question 5

A method of business valuation that is similar to the earnings multiplier. This method is based on projections of future cash flows which are adjusted to get the current market value of the company.

Answer 5

Discounted cash flow method

Question 6

This is the value of shareholders equity of a business as shown on the balance sheet statement. It is derived by subtracting the total liabilities of a company from its total assets.

Answer 6

Book value

Question 7

The net cash that a business will receive if its assets were liquidated and liabilities were paid off today

Answer 7

Liquidation value

Question 8

Commonly referred to as the market value of equity or market capitalization, can be defined as the total value of the company that is attributable to equity investors

Answer 8

Equity value

Question 9

It is calculated by multiplying a company’s share price by its number of shares outstanding

Answer 9

Market capitalization
or
Equity value